Basic Income and Poverty

Basic Income and Poverty

Today is the final day of ‘Challenge Poverty Week’ and in this article Luke explores the current reality of poverty in the UK. Touching on widespread myths of the causes of poverty, Luke goes on to explore how a Basic Income will be a radically transformative policy in tackling the issue. 

The fact that we need a ‘Challenge Poverty Week’ in the UK in 2019 should raise serious questions and concern each and everyone of us. How is it that poverty still exists in 2019 Britain? How can a third of children in the UK be growing up in poverty? How can it be that 26 people own half of the world’s wealth? Well, unsurprisingly the issues of gross inequality and poverty aren’t as separate as many would have you think. You don’t have to be an economist or (god forbid) an investment banker to realise one person having a billion quid is a billion quid the rest of us don’t have. Our understanding of poverty needs to be bold and structural, not simply reacting to its symptoms, like crime or ill health. Its time we started to join the dots and realise that 14 million people in the UK living in poverty is directly linked to the fact there are ten people in the UK who own over £100bn between them. 

The myths of poverty:

But of course when you ask certain people, people who have more than their fair share of this wealth, they wouldn’t want to link their affluence to the suffering of others, would they? So what do they do to draw attention away from the true causes of poverty? They blame the poor themselves, they normalise poverty and they say things like  ‘it’s not as bad as the Victorian times’ – how comforting. Take Jacob ‘foodbanks are uplifting’ Rees-Mogg. He seemingly has no issue with 21st Century Brits being unable to afford enough food to survive – after all he’s made it, so why can’t everyone else? And of course there is Margaret Thatcher herself, who labelled poverty a ‘personality defect’ – an idea people still believe it today. So much of modern policy treats poverty as an individual failure, a choice not to work hard enough or better yourself. Universal Credit aims to sanction and force people into getting better and working harder, because it is based on that very Thatcherite assumption that being poor is the fault of no one but yourself, your laziness and your refusal to work. But when we look around today at the insecure work, at people working three jobs yet remaining in poverty, it is clear Thatcher’s words were a lie. People in poverty are told ‘get a job’. How many times did we hear Theresa May saying “work is the best way out of poverty”? But 60% of people in poverty are part of  a working household. So the actual cause of poverty is not the individual, but low paying, crappy jobs. And yet we are always told the solution to poverty is to get a job. So we’ve stumbled into a ridiculous paradox where the cause of poverty is also the solution to poverty? Low paid jobs are pushing people into poverty, and yet the only solution our government can produce is ‘get a job’? Thatcher’s flawed idea of poverty being the fault of the individual has led to flawed solutions: you create solutions which don’t address the real causes of poverty. The lie Thatcher sold to us was designed to distract us from the real causes of poverty: our failed economic system. A system which enables the ultra-wealthy to steadily grow their billions while others die on the streets. The fact is Poverty isn’t a lack of character, it is a lack of cash. So, here’s a crazy idea, why don’t we give people money. 

Poverty and a Basic Income: 

A Basic Income won’t tentatively tinker around and react to the symptoms of poverty, it has the power to utterly eradicate poverty for good. Now, for those influenced by Thatcher’s Neoliberal ideas, you’ll be thinking ‘but giving people money ignores the addiction, the psychological problems and the laziness that cause poverty’. Will a Basic Income just fund people’s drinking and laziness, pushing more and more into poverty? No – and the reason it won’t is because these Neoliberal ideas are fundamentally untrue. Individual characteristics do not create poverty, they are caused by and are symptomatic of poverty. A Basic Income is a humane and simple way or raising people out of poverty and into basic security. With its implementation we will see a reduction in the behaviours people falsely regard as causes of poverty. 

Don’t believe me? Look at the evidence. Numerous examples of giving people free money and providing a Basic Income of sorts have shown the poverty-fighting qualities of an unconditional income. For example, in North Carolina a Cherokee tribe distributed the profits from a local casino amongst the tribe as an income. This greatly reduced poverty, but it doesn’t end there. Behavioural problems amongst the kids lifted out of poverty fell 40%, crime fell, drug and alcohol use fell and the mental health of the young people lifted out of poverty greatly improved. We can see that  giving people enough money to survive actually reduces social problems –  problems which of course are a consequence of poverty and not a cause. It is time our policies and our society addressed the real causes of poverty and stopped ignorantly blaming the most vulnerable for structural economic failures. 

The current system:

Sadly our current Social Security system is entirely based around the idea that poverty is individually caused. Universal Credit assumes giving needy people money would just make them lazier, drink more alcohol and thus trap them in poverty. As a result, it forces people into work with sanctions and conditions which place the most vulnerable in the most precarious and anxious of positions. After everything discussed so far (and maybe the occasional news headline), you won’t be surprised to hear the whole Universal Credit malarkey hasn’t been working so well. As I said earlier, making people work to get them out of poverty is all fine  until their work is actually the thing causing them to be in poverty in the first place. Then there’s the whole 5 week waiting period to actually receive your Universal Credit. Not sure if the DWP realise it but typically, if you’re applying for Universal Credit you don’t have masses of money allowing you to sit around for 5 weeks while you wait for a load of bureaucrats to sort their shit out. Again, another key factor in increasing poverty is this waiting period. As if that’s not enough, let’s say you’ve waited 5 weeks, scraped by using food banks and you’ve just got your first Universal Credit payment.  But a week later you get offered a job, it’s pretty insecure, no guaranteed contract or wage, but it’s a job nonetheless. Now, do you take the job and risk  having to reapply for Universal Credit in  month’s time and have to wait another 5 weeks without income? Or do you just remain on Universal Credit, because at least you’ve got some guarantees and security? To put it gently, the entire system is an entire clusterfuck that has forced the most vulnerable people through the mill. 

A Universal Basic Income will vastly improve upon the cruel and poverty inducing Universal Credit (irritatingly similar names – the only thing universal about universal credit is the suffering it imposes on its recipients). A Basic Income won’t have a waiting period that pushes people into food banks. It won’t have a variety of conditions which heightens the anxiety of people in the most stressful of circumstances. A Basic Income effectively deals with the true causes of poverty and as such is a policy fit not just for the future, but for today and it will radically alter the inequality of resources, power and security. 

Dealing with the real causes of poverty:

Basic Income will not simply lift people out of poverty by directly providing money equal to or above the poverty-line, but it will also address the causes of poverty. The cycle of poverty which entraps individuals, families and generations has not been dealt with through government policy. The ideological reliance on the market to save people has also failed. Instead we need government to act, to use their power as a tool to mould the economy rather than standing by as our systems continue to leave the same areas in deprivation. Whilst a Basic Income alone cannot solve many of the structural issues driving poverty, nor is it simply dropping money into the unproductive void of poverty as many cynics perceive it. A Basic Income will be critical in enabling the regeneration of areas of multiple deprivation – places that have been ‘left behind’. Putting money directly into people’s hands will reduce people’s debt, boost demand in the local economy and thus encourage growth in local businesses and companies  Again, you don’t need to be an economist to recognise the government cutting funding and spending is only going to reduce demand in the economy, reduce the amount of well-paid jobs and therefore push more and more people towards poverty. A Basic Income directly pumps demand into the economy from the ground up, not only directly lifting people away from poverty, but breathing life into forgotten areas and stopping cycles of deprivation and poverty. 

One of the biggest poverty charities The Joseph Rowntree Foundation identifies the five main drivers of poverty as:

  1. Low waged and insecure work 
  2. Ineffective benefits system 
  3. Family problems 
  4. Lack of skills 
  5. High cost of living

Do the Neoliberal amongst us notice how laziness didn’t make the list? Let me hide my surprise. I thought I may as well run through these five main causes and discuss separately how a Basic Income will combat them:

  1. Low waged and insecure work – A Basic Income will provide people with security and empower them to tell low paying employers to get stuffed. Workers having an unconditional income will force employers to actually pay a decent wage – eradicating exploitative work and activities that push people into poverty.
  2. Ineffective benefits system – The Basic Income is a radical departure from the failing Universal Credit system. Firstly, it will be set at a higher level than Universal Credit and in line with inflation, lifting people above the poverty line. Moreover, there won’t be any five week waits pushing the most vulnerable to food banks and deeper poverty. And unconditionality means people won’t be forced to take the low waged and insecure work, which the current system forces people into.
  3. Family problems – A Basic Income is paid to all individuals, so regardless of familial situation, you will have enough to live. Family breakdowns often lead to poverty and even homelessness. A Basic Income will prevent this through providing all people with an income and giving them autonomy. 
  4. Lack of skills – A key facet of the poverty cycle is education: people in poverty have lower educational outcomes and this often leads to low waged work – work that keeps people in poverty. A Basic Income will break this cycle by lifting households out of poverty, providing the space and support to ensure all children fulfil their potential – you only have to look at the North Carolina tribe to see the impact. Additionally, for adults who want to gain skills, a Basic Income can provide the funds to pay for a course or to afford to take time out of work and study
  5. High cost of living – Whilst wages have been stagnating and falling, living costs have been rising. A Basic Income will be set at a level to cover basic amenities and thus ensure all people can afford to live, not rely on charity and food banks. Unlike Universal Credit which has not risen with inflation and forced people into poverty, those who are reliant on social security will be supported by a a Basic Income which will be set at a level that ensures basic security. 

Addressing the Criticism:

It wouldn’t be fair to write this article without also touching upon some the doubts people have over a Basic Income’s ability to fight poverty. The Joseph Rowntree Foundation (JRF) in the past has questioned whether a Basic Income would do anything to poverty levels, even suggesting poverty could increase. This conclusion was based on a model of the Basic Income the JRF themselves designed. They suggested that if everyone gets a bit more money, there would be no reduction in relative poverty and in fact people earning an okay wage getting an additional income would pull away from the poorest, thus increasing relative poverty. Firstly, when looking at the Basic Income the JRF actually designed, it was a pretty flawed model that little resembled  the detailed and progressive designs many Basic Income scholars have created. It was what you might call a ‘straw man’ – designed simply to be destroyed and prove a point. Furthermore, whilst a static model can show economic changes on paper, these simulations do not include the behavioural changes which a Basic Income will facilitate. As many actual experiments have shown, when people are mentally freed up by having basic security, their actions change substantially. Psychologists call this the ‘mental-bandwidth’ and when you have financial stress to add on top of a multitude of other anxieties, your mental space or ‘bandwidth’ is greatly inhibited – often linked with getting stuck in cycles of poverty. But with a Basic Income, people’s mental capacity will expand, they will have more time to think and thus the behavioural changes we see in various pilots ensue. The unlocking of people’s potential enabled by a Basic Income can never be fully quantified in a static model. 

However, despite the flaws, the question marks over the poverty-combatting ability of the Basic Income need to be addressed. If you were to freeze everyone in their current position and give the entire population a Basic Income, according to our current method of measuring relative poverty, there would be no large relative reduction. But fundamental to a poverty fighting Basic Income is its design. A Basic Income set above the poverty line, funded by a radically more progressive taxation will reduce poverty. Redistributing resources from those who are very financially comfortable to those who are vulnerable to poverty will drastically reduce inequality and lift people away from poverty. Again, many criticisms of a Basic Income preclude the result before they undertake simulations, creating models and variants which will always have a limited impact on poverty. A progressively funded Basic Income, that effectively redistributes taxation will greatly impact poverty. Remember, people’s poverty status is directly related to other people’s billionaire status. You cannot expect an isolated policy to alter the structural causes of poverty. It is a Basic Income funded by a radically progressive taxation system, that recognises one person’s extreme wealth is another’s extreme poverty, and thus redistributes funds that will ultimately eradicate poverty for good. 

Looking Forwards:

‘Challenge Poverty Week’ is a perfect opportunity to reflect on the very serious poverty problem the UK is facing. Only last year the UN rapporteur on extreme poverty (Philip Alston) visited the UK and concluded the UK Conservative government had led a “systematic immiseration [economic impoverishment]” of British people. Now this guy isn’t some crazy lefty with a vendetta against Tories, but in fact a Professor and independent expert in human rights law. Make no bones about it, the existence of such extreme hardship alongside the grotesque wealth in the UK is outrageous and an injustice we should never become apathetic towards. Whilst the British media may only give these real issues a few moments before returning to Boris’ latest gaff, we need to keep the heat up on those in power. We should all demand the right to a Basic Income that ensures no human being ever goes without basic necessities. Poverty is not an individual issue but a consequence of economic policy choices. And as such we should choose policy that combats the structural imbalance between extreme wealth and extreme destitution by redistributing money away from the 1% to the rest. A Basic Income isn’t left or right, it is forward, and we cannot move forward until we come together to eradicate poverty once and for all. 

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